Don’t be burnt by solar funds

13 january 2013

 

Money has been pouring into enterprise investment schemes after the government increased tax relief from 20% to 30% last April, but experts warn that those who invest in solar schemes could get back less than they put in.

EISs offer 30% tax relief on shares in small, higher-risk unquoted companies, provided the shares are held for a minimum of three years. The schemes are exempt from inheritance tax after two years and profits are free from capital gains tax. The maximum annual investment will double from £500,000 to £1m from April 6.

Investors have been piling into EISs that invest in solar panels in the past 18 months because this is the last tax year in which they can invest in such projects. From April 6, solar panel developments will no longer be a legitimate trade for EISs and venture capital trusts.